MORE THAN MEETS THE EYE
TBY talks to Gustavo Leite, Minister of Industry and Commerce of Paraguay, on the advantages of being an agricultural hub, streamlining tax policy, and its advantages as a country for supplying the Brazilian market
BIOGRAPHY
Gustavo Leite holds a bachelor’s in business administration from the University of California-Irvine and Chapman University and a master’s in international marketing from Strathclyde University. He was the Minister of Development Planning from 1998-1999, when he co-authored the Governmental Plan of Economics and Social Development 1998-2003 and served as coordinator of the Economic Council of Ministers. Prior to that, he was the Managing Director of PROPARAGUAY, an agency that promotes Paraguayan exports, and head of the commercial section at the Embassy of Paraguay in Brussels to the EU. He was also the General Manager of Paraguay Partners, a company that develops real estate projects. In 2013, he was appointed Minister of Industry and Commerce.Paraguay's FDI inflows dipped in 2014 and then picked up in 2015. What were the key drivers for that revival in FDI?
The figures are positive, but more important are the trends. These have been consistently positive, which illustrates how Paraguay remains stable and has continuous growth, even though some years the growth rate can vary. Paraguay has come out of its shell as a country and is just beginning to become known as an investment destination by the rest of the world. We are making a big drive to become more widely known and have no doubt that if a company reviews Paraguay's offering it will discover that it is a formidable place for investment in three areas. The first is food production, the second factories, and third logistics. Paraguay is a hub at the center of South America, with a champion factory provision. Testament to that is the fact that we have attracted over 80% of the industries that have moved their operations from Asia to supply the Brazilian market.
The natural point of trade between Paraguay and the UAE is food, especially since food security is a pressing issue in the latter. Is this the primary link between the two countries?
Capital ultimately goes where it is going to make money and where investors feel their money will be safe. Paraguay has built a reputation for being a safe and profitable place. If you have these factors as your base you can attract attention to any area. We have established an apparatus to ensure that investments are secure and are now promoting the country with that narrative and declaring ourselves open for business with the UAE.
Bilateral trade between the UAE and Paraguay was just under USD70 million in 2016. How significant is that for Paraguay?
Bilateral trade is something that is going to increase in conjunction with investment in Paraguay. Simply put, we cannot export what we are not yet producing; instead, we have to look at the potential. When investors are looking at the profitability of opportunities in a country, they look at the stability and depth of the opportunities. Mature markets, for example, offer stability, but not the same growth margins. Paraguay, on the other hand, still has the potential to triple its agricultural output.
There have been discussions during previous diplomatic visits about trying to eliminate double taxation between Paraguay and the UAE. How would that stimulate trade?
It would stimulate investment, which in turn stimulates trade. So far treaties have been signed to eliminate double taxation with countries such as Chile and Taiwan, and they have been positively received because businesses can decide where they pay their taxes. According to these agreements, businesses just pay any unpaid remainder to their country of origin. This a very smart way to put Paraguay on the map. We have a 10% flat tax for businesses, individuals, and VAT, which helps to attract more investors without affecting our base, which is very low anyway. We are similar to the UAE in that sense, in that we have the lowest tax rate in Latin America.
Can you give us insight into any deals you might be brokering during your visit to Dubai?
We are preparing to lay the groundwork for a very strong diplomatic and economic trade and investment relationship with the UAE. It imports a lot of food that we produce, and to maintain that we have to stay competitive in terms of volume and pricing. We do not believe in subsidies; we believe in real competition. The Arab League as a whole imports over USD8 billion of chicken, beef, lamb, and other food products. We are very interested in tapping into that market because doing so will yield further investment, which gives more Paraguayans a higher standard of living.
MORE THAN MEETS THE EYE
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